Description
In this such a brief description in relation to offering a practical model for identifying of entrepreneurial opportunity.
Journal of Food, Agriculture & Environment, Vol.10 (2), April 2012
1017
www.world-food.net
Journal of Food, Agriculture & Environment Vol.10 (2): 1017-1023. 2012
WFL Publisher
Science and Technology
Meri-Rastilantie 3 B, FI-00980
Helsinki, Finland
e-mail: [email protected]
Offering a practical model for identifying of entrepreneurial opportunity: The case study
of fish industries
Mahmood Ahmadpour Dariani
1
, Tayebeh Abdoli Mohamdabadi
1
and Asef Karimi
2*
1
University College of Entrepreneurship, University of Tehran, Tehran, Iran.
2
University College of Agriculture and Natural
Resources, University of Tehran, Tehran, Iran. *e-mail: [email protected], [email protected]
Received 20 December 2011, accepted 4 May 2012.
Abstract
Regarding to the importance of opportunities identifying in entrepreneurial process, in this research, a new practical model for identifying of
entrepreneurial opportunities has been applied. The purpose of this model is to identify the de facto opportunities in different industries that
eventually helps the development of new and de facto businesses. This model includes two aspects: the superficial and the depth one. In the
superficial aspect, the variety of businesses is investigated which makes the innovative and radical opportunities, and the depth aspect shows the
number of imitative and incremental businesses. By interview to fisheries experts about the method of identifying the entrepreneurial opportunities
in this industry, this model, as a practical model resulted in acceptable and satisfactory conclusions.
Key words: Entrepreneurship, opportunity, business, innovation, environment.
Introduction
The identification of opportunities has been recognized as one of
the most important abilities of successful entrepreneurs and
consequently has become an important element of the scholarly
study of entrepreneurship
24
. Understanding the opportunity
identication process represents one of the core intellectual
questions for the domain of entrepreneurship
46
. The opportunity
identifying is a process that as a result, someone finds potential
opportunity to identify something with the capacity of economic
value
6
.
One of the most important characteristics of entrepreneurs is
opportunity orienting, and the opportunity in the society is an
important incentive for entrepreneurship. The social demands and
requirements, the material and professional sources and facilities
result in making new ideas in the entrepreneurs’ mind that they
finally launch these opportunities practically
40
. If the domain of
entrepreneurship is the nexus of two phenomena: the presence of
lucrative opportunities and the presence of enterprising
individuals, then most entrepreneurship models suggest an
explanation of this nexus through exploring how both external
(i.e. social capital) and internal factors (i.e. cognition) affect why
some people and not others exploit
16
.
Explanations for how new opportunities emerge include prior
experiences, personal disposition, changes in the broader
environment, gaining specic information, and being a frustrated
user. Furthermore, discovering new opportunities has been linked
to personal awareness, skills and insights
50
. Researchers
44, 46, 48
have suggested that opportunity identification may be related,
among other factors, to entrepreneurial alertness, prior
knowledge
44
, social networks
48
, entrepreneurial cognition
6
and
potential financial rewards
46
.
The opportunities identifying can be defined as identifying a
collection of ideas
17, 25, 29, 45
, related to needs
3, 8
affected by
environmental changes and circumstances
6, 8, 20
which create
new businesses
8
, and eventually this process creates the value
1,
37
through making new products and services
6, 20, 44, 45
.
In this article, a model is introduced for identifying opportunity
that practically identifies the de facto opportunities in the industry
and helps to create new businesses and to develop existent
businesses. The model includes two parts “A” and “B” (Fig. 1).
The part A is about factors, which are affecting opportunities
identifying and the part of B is about types of opportunities. As
metaphor, a glass of water is a good example for this model because
it analyses the opportunities for two dimensions: superficial and
in depth.
The base of this model is the response of people to the
environmental changes
24
.The entrepreneur affects the process
of initiating an idea to creating a new business
48
with his own
capabilities
31
, individual traits
50
, considering the circumstances
25
,
the effects of social network and various factors, such as prior
knowledge and experience
7, 37
. The process of an entrepreneurial
opportunity can be resulted in an opportunity-oriented effort
30
.
The scanning and search dimension helps lay the foundation
for developing cognitive frameworks
50
, and it motivates an
entrepreneur for investing on the new ideas and useful
opportunities for new businesses
50
. These new businesses
include to invent a new product, to make a new market and a new
production method to explore the new source for supplying of
raw material and semi knock-down products and also to start up a
new business
43
.
1018 Journal of Food, Agriculture & Environment, Vol.10 (2), April 2012
In the main process of initiating an idea to starting up a new
business with considering all above mentioned factors, one of
the key factors of opportunities identifying is superficial
dimension. The superficial dimension of opportunities consists
of the variety of businesses and includes achieving the radical
and innovative opportunities at which entrepreneurs break existing
means-ends framework.
When appropriate, alert entrepreneurs are willing to abandon
the existing means-ends framework and develop new ones
representing best guesses about the future. These guesses or
visions are realized as innovative products, services, or processes
that compete with existing products, services and processes (i.e.
the existing means-ends framework) as well as with alternatives
offered by other entrepreneurs
24
. In depth dimension of
opportunities that are the second factor of this process, there are
varieties of businesses. With the repeat of de facto businesses
increase their numbers for filling up the gap of demands in current
market. The entrepreneur identifies the opportunities with his
intelligence or creates them by interpreting and perceiving
43
and/or
with insights about ways to improve the efficiency of return on
those allocations may lead to the identification of imitative or
incremental market opportunities
24
.
Saremi and Alizade Sani
42
showed that there is a meaningful
relation between entrepreneurial opportunities identifying and
variables such as entrepreneurship intelligence, the entrepreneur
traits, social networks, prior knowledge and driven forces. It can
help to identify the essential factors of opportunity identifying
and instructing and reinforcing them among potential
entrepreneurs which finally lead to promoting them in different
fields
42
. Adding other factors, such as skills, social skills
6
and
knowledge acquisition and learning
46
, could potentially enable
us to have a wider appreciation of opportunity evaluation
51
.
The new ideas for products, services, technologies or new
businesses emerge from the exact evaluating of external
environment
25
. To exploit the opportunity, an entrepreneur must
first escape ignorance that an opportunity for someone exists
within the environment and then overcome doubt about the
feasibility and desirability of action
47
.
Individual Capabilities
The traits: The two following traits are related to successful
identifying of opportunities. The first is to be ‘optimistic’, and the
people who have the positive attitude to the world are more capable
to identify the entrepreneurial opportunities
30
. The connection
between optimism and higher opportunity recognition has been
observed by a number of researchers
3, 13
. The entrepreneurial
) A (
----------------------------------------------------------------------------------------------
Idea Business
Superficial opportunities Opportunities
Variety of idea variety of businesses
Depth opportunities
) B ( ) numbers of businesses (
Environment
Individual capabilities
- The traits
- optimistic
- creativity
- Specific human capital management
skills
- Competence
- Risk recognition
- Ability to absorb and bear uncertainty
Social networks
- Partners
- Internal restrict
- The weak nodes network
- Activity collection
Prior knowledge and experience
- Information process
- The background and
experience
- Knowledge structure
- Technology expertise
- Customer needs
- New markets
Cognitive frameworks
Research Alertness
- Identified opportunities
- Created opportunities
- Imitative opportunities
- Incremental opportunities
Changes and trends in the
environment
-Innovative opportunities
Radical Innovation
-Innovative opportunities
-Radical innovation
Environment
Figure 1. Entrepreneurial opportunity identification model.
Journal of Food, Agriculture & Environment, Vol.10 (2), April 2012
1019
optimism is related to self-efficacy beliefs. The entrepreneurs’
optimism is an ‘‘inside view’’ of the potential success of the venture,
largely based on the entrepreneurs’ evaluations of their abilities
and knowledge. When forced to take an outside view,
entrepreneurs were much more realistic in judging probable
outcomes
3
. Cooper et al.
13
described that entrepreneurs
comparing to others are more optimistic and entrepreneurs who
promote rapidly is often so much optimistic for evaluating of
opportunities.
The second personality trait is ‘creativity’. Creative factors play
a great role in entrepreneurial decision making. Schumpeter
58
was
the first to introduce the notion that successful entrepreneurs
discover opportunities that others do not see. Hills and Lumpkin
26
found that 90% of those surveyed by them, find creativity very
important for opportunity identification. However, solo
entrepreneurs found it significantly more important than did the
networked entrepreneurs
3
. Also Chandler and Detienne
12
believe
the creativity has positive relation to starting up a new business.
Risk recognition: The risk recognition is defined as the
entrepreneur tendency to accept or avoid the risk. Entrepreneurs
tend to view business situations more positively than do non-
entrepreneurs. They perceive strengths and opportunities where
others see weaknesses and threats
15
. Risk recognition and
network relationships are important to the stimulation and
advancement of new ideas
16
.
Specific human capital: Defined human capital more specifically,
delineating it into general human capital (basic skills) and specific
human capital (industry-related or technically related skills), there
will be a positive relationship between an individual’s level of
specific human capital and the number of opportunities identified
14
.
Ardichvili et al.
3
suggested 4 parts for defining the relation
between opportunity identifying and human capital: 1) special
interest; 2) prior knowledge about the market; 3) prior knowledge
about the customer problems; 4) prior knowledge about the
different possible ways for servicing to the markets which
probably flourish and raise with identifying successful
entrepreneurial opportunities.
Management skills: Few studies have shown the link between
management skills and opportunity recognition skills of the
entrepreneurs. Park
36
argues that management skills in addition
to technical skills are needed to identify the right opportunities in
hi-tech startups
41
.
Competence: Entrepreneurial competence is defined as the set of
knowledge, skills, and abilities that enable an entrepreneur to
successfully perform their job role
34
. The traits affects the growth
of new venture businesses and play role in identifying the
opportunities and organizational skills
9
.
Ability to absorb and bear uncertainty: The uncertainty tolerance
plays a role in the motivation of entrepreneurial action, and the
ability to bear uncertainty is important at the noticing stage. One
deals with the entrepreneur’s perception of the level of uncertainty
(ability to absorb uncertainty), and the second stream deals with
the entrepreneur’s ability to function effectively in uncertain
environments (ability to bear uncertainty). Individuals must be
capable of absorbing the uncertainty associated with exploiting
an opportunity. If they lack this capability, they are unlikely to use
their cognitive capabilities to look for opportunities
10
. To escape
ignorance, prospective entrepreneurs must possess sufficient
information about the environment, enough relevant knowledge
to give that information meaning, and be motivated enough to
take notice of the information upon encountering it
47
.
Social Networks
Social network provides the financial supports, credits and the
business and information sources. Therefore, the entrepreneur
social network as a collection of opportunities helps entrepreneurs
to reach to intangible information and tangible sources
5
. Also
Baron and Ozgen
7
expressed that professional networks are one
of the most important factors that affect opportunities identifying
by entrepreneurs directly and positively. It has also provided
information from these networks to make entrepreneurs more aware
about potential opportunities and help them to identify the suitable
opportunities. The high consolidated networks are effective to
create knowledge and new ideas and also finding the opportunities
for starting up the new businesses
4
.
Partners: Includes the formal partners with or without identical
shares, besides the informal partners which benefit from the
business.
The weak nodes network: Reaching new and unique information
by these networks is so much easier because of the lack of regular
interaction of person with the networks. Hence, these persons
find more opportunities.
Internal restrict: The collection of persons with whom the
entrepreneur has sustainable and long-term relations but they are
not as partners in the business, that include close friends, family,
colleagues and neighbours.
Activity collection: The persons whom the entrepreneur apply to
provide essential sources for identifying the opportunities
30
.
Prior Knowledge and Experience
Prior knowledge, which refers to an individual’s distinctive
information about a particular subject matter, may be the result of
work experience, education or other means. Therefore, prior
knowledge provides people an increased ability to “see” more
quickly important connections between concepts, which enhances
his or her ability to identify more opportunities and increased creative
ability to generate more innovative opportunities
46
. Knowledge can
be an enabling as well as a constraining factor in opportunity
development
56
. Entrepreneurs with business ownership experience
identified more business opportunities, and more innovative
opportunities
53
.
Information process: To identify the opportunities for new venture
businesses, entrepreneurs should acquire the information about
special industries, technologies, markets, governmental policies
and other factors in some ways and interpret and implement them.
These types of information have the important roles in initiated
identifying of opportunities and studying of their feasibility before
the entrepreneurs conclude that they are qualified as opportunities
1020 Journal of Food, Agriculture & Environment, Vol.10 (2), April 2012
to start up new and sustainable venture businesses
7
. Opportunity
recognition by connecting the dots, using cognitive frameworks,
relates to objective information processing
7
. The human information
processing can moderate entrepreneurial opportunity
identification
54
.
The background and experience: The experience is a person
thought patterns development along the time that enables the
entrepreneur, comparing to others, to perceive, refine, analyze,
make decision and implement based on opportunities effectively
17
.
Entrepreneurs revealed that most successful ideas stemmed from
entrepreneurs prior experience of customers and markets
27
.
Knowledge structure: Knowledgeable individuals have created
categories of information based on a deep structure that involves
more stronger and richer links between concepts. These deeper
and richer connections can enhance an individual’s ability to
identify opportunities that are more innovative
46
. Entrepreneurs
construct profit opportunities in their minds from their knowledge
of the business world
55
. This entails making new connections
between different types of knowledge
22
.
Technology expertise: One of the effective factors in creating
innovations that acquires with experience and knowledge is
technology expertise, which has an important role in identifying
and developing an opportunity
36
. Deep technological knowledge
is prerequisite and necessary factor for new venture business
ideas
27
. Entrepreneurs are able to identify new ideas for new
businesses and making new products and services that others
would like to buy them by applying their expertise and experiences
25
.
Customer needs: The awareness about the customer needs help
create a new idea and finally start up a new business
36, 38, 44
.
New markets: Entrepreneurs create new opportunities by the
destruction of de facto structure of markets and make new demands
through innovation. This may lead to elimination of existing
markets. These new markets are a new agent in creating new ideas
3,
36
. Entrepreneurial opportunities are derived from the unbalance
factors in the markets
28
.
Cognitive frameworks: Opportunities emerge from a complex
pattern of changing conditions – they come into existence at a
point in time because of the juxtaposition of conditions which did
not previously exist
7
. Recognition of opportunities depends,
partially on individual cognitive structures - frameworks developed
from experience that provides the cognitive basis for “connecting
the dots” into patterns suggestive of new business opportunities.
One reason why specific persons (and not others) perceive such
patterns is that they possess the cognitive frameworks that permit
them to do so
37
.
Alertness: Alertness is a process and perspective that helps some
individuals to be more aware of changes, shifts, opportunities,
and overlooked possibilities
50
. Intelligence and improving the
people capabilities for organizing and interpreting of information
in the different areas of knowledge relationship is increasing of
new opportunities
23
. Then alertness is a concept that has the
potential to add substantially our understanding of how new ideas
get initiated and pursued. Alertness has been central in the context
of the recently developing area of “opportunity” in
entrepreneurship research
50
. Ardichvili et al.
3
argue that any
recognition of opportunity by a prospective entrepreneur is
preceded by a state of heightened alertness to information.
Research: The theoretical base of active research is compatible
to neoclassic economy view and the entrepreneurial benefits
belong to people or organizations with better research skills
12
.
Entrepreneurs are more likely to engage in active search for
opportunities. Opportunities often recognized by people not
engaged in active search
37
. As a result the scanning and search
dimension helps lay the foundation for developing cognitive
frameworks. Entrepreneurs with more extensive scanning and
search will have a wider range of knowledge and information,
which can benefit them in attaining expert performance in enhanced
alertness to business
50
.
From Idea to Business
An entrepreneur’s personal characteristics and environment
influence the proceeding from a new venture idea to an
entrepreneurial opportunity
48
. Singh et al.
48
believed that the
process of opportunities identifying is the evaluation of initial
business ideas by entrepreneurs and to realize some of them and
they decide to start up new venture of businesses based on them
17
.
The opportunities are identified by recognition and development
of creative ideas that finally result in starting up a new business
25
.
Entrepreneurs decide to start a new business or expand in a new
product-market when they think that there is an opportunity to
transform the resources away from present average configurations
to more promising opportunities
3
.
Changes and trends in the environment: Changes are the source
of opportunities and any change in the environment is resulted in
identifying of series of opportunities
21, 33, 43, 49
. The process of
identifying of opportunities is started with evaluating external
environment analyzed by searching process
25
. In beliefs of Mayo
et al.
30
the more intelligent people do not miss the important
changes causing new profitable ideas for business. It is also
believed, the opportunities are indentified better by perception of
environmental changes and trends
37
.
Type of Opportunities
Innovative opportunities: Innovation is to invent a new product,
to make a new market, a new production method , to explore a new
source for supplying of raw material and semi knock down
products and also to start up a new business
1
. The successful
entrepreneurs join creativity and innovation to needs and
opportunities of the market by an organized and regulated process
and convert them to the entrepreneurial opportunities with
continuous actions and emerge them with starting up the
businesses
35
. In the innovation to search for finding opportunities
of production, market and implementation is considered that these
opportunities do not exist now
19
. The factors like environment,
the entrepreneur characteristics and the new technology and
knowledge have the important role to identify the innovative
opportunities that this subject is the core force and initial part in
the entrepreneurship process
11
.
Journal of Food, Agriculture & Environment, Vol.10 (2), April 2012
1021
Radical innovation: Radical innovation is the fundamental
innovation with the high novelty either its effect on the series of
product properties (price performance) or main changes supply,
such as breaking to past path. These innovations are often
described with expressions like pioneer inventions
2
and
discontinuous markets
52
. Radical innovation involves the
application of significant new technologies or significant new
combinations of technologies to new market opportunities
39
and
renders all the old skills and obsolete knowledge. This is an
opportunitity for new players to enter the industry and take over
the old firms
52
.
The ‘incremental opportunities’ put the front side of radical
opportunities. When entrepreneurs take action in the market place,
they may discover business opportunities but they would identify
and pursue business opportunities that either represent
incremental improvements over existing goods, services, and
processes or represent imitations of existing opportunities
23
.
Imitative opportunities: Although this strategy conflicts to
innovation but it is much valuable to institutionalize the spirit of
entrepreneurship in the organization
1
. A number of people got
their ideas by looking at other peoples businesses. They saw
someone else at work and felt that they could do it better
51
or they
simulate and repeat the innovative works of entrepreneurs
1
.
Concept ‘creation’ involves redirecting or recombining resources
in order to create and deliver value superior to that currently
available. Concept creation may go well beyond adjustment of
current matches of resources and needs and may even lead to
dramatic restructuring of an existing business or ‘radical
innovation’
3
. The entrepreneurs do not identify the opportunities
but they create them by taking advantage from change and
innovation in the economy
12
. Entrepreneurs are the rare talented
people using the technological and sociological changes to make
a revolution in de facto balance and create new products, services
and methods
20
. A person with imagination and dream can create
opportunities from nothing. Hence, the opportunities are just in
the mind of people and emerge by implementing them practically
12
.
Discovery: Perception of a ‘‘fit’’ between market needs and
resources presupposes that the needs and resources were already
matched, as might be the case with an underperforming business.
Perception of an existing ‘‘match’’ of market needs and resources
represents discovery of the type that might follow exploration of
a particular geographic area or product market space
3
.
Entrepreneur identifies the opportunities by dealing and
moderating of prices in the market and also investing on the
knowledge or the asymmetry of information. Entrepreneurs find
the opportunities considering of the economic conditions, the
partial integration of people decisions and the prices adjustments
in the market circumstances
20
. The launching of opportunity is
from the identifying the opportunity
44
. According to the view of
society needs, the identifying of opportunities is emphasized on
the de facto and approximately unsatisfied needs
32
.
For proving that the model is practical in “B” section (Fig.1), an
investigation in the fishing industry was done by the arrangement
of an interview with experts. For identifying of opportunities, first
all the related businesses of fishing industry in the world were
investigated and all of them were put in the superficial dimension
of the model. The group of businesses in Iran has been put the
left side of model and the others not Iran has been put the right
side of model. The businesses in the right side of model are as the
opportunities of the new and innovative businesses in the fishing
industry of Iran that they increase the variety of businesses in
this industry. The businesses in the left side of model have the
sufficient potential to increase as the imitative and incremental
businesses and deepen the model or increase the number of
businesses in this industry.
The mentioned items in the right side of the model are the
opportunities up to date the fishing industry of Iran in the world
including lobsters and crabs and mollusks, aquatic plants, culture
frogs, crocodiles, cage culture, fish, marine fish breeding freshwater
fish like tilapia and carp and eel and salmon culture, echinoderms.
Establishment of complementary industries to improve the quality
and using the waste of aquatics for the pharmaceutical and
cosmetics applications and the establishment of information banks
to inform breeders and fishermen that there are not businesses
like above mentioned items but in the world there are all of them
with much variety in each item. Therefore, use of this model causes
to identify the types of entrepreneurial opportunities in the different
industries (Fig.2).
Conclusions
In todays world, the identifying of opportunities has been known
as one of the most important capabilities of entrepreneurs. These
innovative entrepreneurs are economic heroes whose creativity
invigorates the economy with new ideas that lead to economic
growth, but less imaginative people can also play an important
role. They can copy the business ideas of pioneers. In doing that,
they spread new business techniques and raise productivity
throughout an economy
57
.
In this article, a new and practical model has been designed for
identifying types of entrepreneurial opportunities. It is important
to consider opportunity as a two-dimension element that one side,
opportunities regarding to environment conditions can be
innovative and result in the variety of businesses. On the other
side, the identified opportunities can be considered as imitated
and incremental opportunities and result in increasing the
businesses that finally, the efficiency of economy will be increased
several times more than now.
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doc_437043142.pdf
In this such a brief description in relation to offering a practical model for identifying of entrepreneurial opportunity.
Journal of Food, Agriculture & Environment, Vol.10 (2), April 2012
1017
www.world-food.net
Journal of Food, Agriculture & Environment Vol.10 (2): 1017-1023. 2012
WFL Publisher
Science and Technology
Meri-Rastilantie 3 B, FI-00980
Helsinki, Finland
e-mail: [email protected]
Offering a practical model for identifying of entrepreneurial opportunity: The case study
of fish industries
Mahmood Ahmadpour Dariani
1
, Tayebeh Abdoli Mohamdabadi
1
and Asef Karimi
2*
1
University College of Entrepreneurship, University of Tehran, Tehran, Iran.
2
University College of Agriculture and Natural
Resources, University of Tehran, Tehran, Iran. *e-mail: [email protected], [email protected]
Received 20 December 2011, accepted 4 May 2012.
Abstract
Regarding to the importance of opportunities identifying in entrepreneurial process, in this research, a new practical model for identifying of
entrepreneurial opportunities has been applied. The purpose of this model is to identify the de facto opportunities in different industries that
eventually helps the development of new and de facto businesses. This model includes two aspects: the superficial and the depth one. In the
superficial aspect, the variety of businesses is investigated which makes the innovative and radical opportunities, and the depth aspect shows the
number of imitative and incremental businesses. By interview to fisheries experts about the method of identifying the entrepreneurial opportunities
in this industry, this model, as a practical model resulted in acceptable and satisfactory conclusions.
Key words: Entrepreneurship, opportunity, business, innovation, environment.
Introduction
The identification of opportunities has been recognized as one of
the most important abilities of successful entrepreneurs and
consequently has become an important element of the scholarly
study of entrepreneurship
24
. Understanding the opportunity
identication process represents one of the core intellectual
questions for the domain of entrepreneurship
46
. The opportunity
identifying is a process that as a result, someone finds potential
opportunity to identify something with the capacity of economic
value
6
.
One of the most important characteristics of entrepreneurs is
opportunity orienting, and the opportunity in the society is an
important incentive for entrepreneurship. The social demands and
requirements, the material and professional sources and facilities
result in making new ideas in the entrepreneurs’ mind that they
finally launch these opportunities practically
40
. If the domain of
entrepreneurship is the nexus of two phenomena: the presence of
lucrative opportunities and the presence of enterprising
individuals, then most entrepreneurship models suggest an
explanation of this nexus through exploring how both external
(i.e. social capital) and internal factors (i.e. cognition) affect why
some people and not others exploit
16
.
Explanations for how new opportunities emerge include prior
experiences, personal disposition, changes in the broader
environment, gaining specic information, and being a frustrated
user. Furthermore, discovering new opportunities has been linked
to personal awareness, skills and insights
50
. Researchers
44, 46, 48
have suggested that opportunity identification may be related,
among other factors, to entrepreneurial alertness, prior
knowledge
44
, social networks
48
, entrepreneurial cognition
6
and
potential financial rewards
46
.
The opportunities identifying can be defined as identifying a
collection of ideas
17, 25, 29, 45
, related to needs
3, 8
affected by
environmental changes and circumstances
6, 8, 20
which create
new businesses
8
, and eventually this process creates the value
1,
37
through making new products and services
6, 20, 44, 45
.
In this article, a model is introduced for identifying opportunity
that practically identifies the de facto opportunities in the industry
and helps to create new businesses and to develop existent
businesses. The model includes two parts “A” and “B” (Fig. 1).
The part A is about factors, which are affecting opportunities
identifying and the part of B is about types of opportunities. As
metaphor, a glass of water is a good example for this model because
it analyses the opportunities for two dimensions: superficial and
in depth.
The base of this model is the response of people to the
environmental changes
24
.The entrepreneur affects the process
of initiating an idea to creating a new business
48
with his own
capabilities
31
, individual traits
50
, considering the circumstances
25
,
the effects of social network and various factors, such as prior
knowledge and experience
7, 37
. The process of an entrepreneurial
opportunity can be resulted in an opportunity-oriented effort
30
.
The scanning and search dimension helps lay the foundation
for developing cognitive frameworks
50
, and it motivates an
entrepreneur for investing on the new ideas and useful
opportunities for new businesses
50
. These new businesses
include to invent a new product, to make a new market and a new
production method to explore the new source for supplying of
raw material and semi knock-down products and also to start up a
new business
43
.
1018 Journal of Food, Agriculture & Environment, Vol.10 (2), April 2012
In the main process of initiating an idea to starting up a new
business with considering all above mentioned factors, one of
the key factors of opportunities identifying is superficial
dimension. The superficial dimension of opportunities consists
of the variety of businesses and includes achieving the radical
and innovative opportunities at which entrepreneurs break existing
means-ends framework.
When appropriate, alert entrepreneurs are willing to abandon
the existing means-ends framework and develop new ones
representing best guesses about the future. These guesses or
visions are realized as innovative products, services, or processes
that compete with existing products, services and processes (i.e.
the existing means-ends framework) as well as with alternatives
offered by other entrepreneurs
24
. In depth dimension of
opportunities that are the second factor of this process, there are
varieties of businesses. With the repeat of de facto businesses
increase their numbers for filling up the gap of demands in current
market. The entrepreneur identifies the opportunities with his
intelligence or creates them by interpreting and perceiving
43
and/or
with insights about ways to improve the efficiency of return on
those allocations may lead to the identification of imitative or
incremental market opportunities
24
.
Saremi and Alizade Sani
42
showed that there is a meaningful
relation between entrepreneurial opportunities identifying and
variables such as entrepreneurship intelligence, the entrepreneur
traits, social networks, prior knowledge and driven forces. It can
help to identify the essential factors of opportunity identifying
and instructing and reinforcing them among potential
entrepreneurs which finally lead to promoting them in different
fields
42
. Adding other factors, such as skills, social skills
6
and
knowledge acquisition and learning
46
, could potentially enable
us to have a wider appreciation of opportunity evaluation
51
.
The new ideas for products, services, technologies or new
businesses emerge from the exact evaluating of external
environment
25
. To exploit the opportunity, an entrepreneur must
first escape ignorance that an opportunity for someone exists
within the environment and then overcome doubt about the
feasibility and desirability of action
47
.
Individual Capabilities
The traits: The two following traits are related to successful
identifying of opportunities. The first is to be ‘optimistic’, and the
people who have the positive attitude to the world are more capable
to identify the entrepreneurial opportunities
30
. The connection
between optimism and higher opportunity recognition has been
observed by a number of researchers
3, 13
. The entrepreneurial
) A (
----------------------------------------------------------------------------------------------
Idea Business
Superficial opportunities Opportunities
Variety of idea variety of businesses
Depth opportunities
) B ( ) numbers of businesses (
Environment
Individual capabilities
- The traits
- optimistic
- creativity
- Specific human capital management
skills
- Competence
- Risk recognition
- Ability to absorb and bear uncertainty
Social networks
- Partners
- Internal restrict
- The weak nodes network
- Activity collection
Prior knowledge and experience
- Information process
- The background and
experience
- Knowledge structure
- Technology expertise
- Customer needs
- New markets
Cognitive frameworks
Research Alertness
- Identified opportunities
- Created opportunities
- Imitative opportunities
- Incremental opportunities
Changes and trends in the
environment
-Innovative opportunities
Radical Innovation
-Innovative opportunities
-Radical innovation
Environment
Figure 1. Entrepreneurial opportunity identification model.
Journal of Food, Agriculture & Environment, Vol.10 (2), April 2012
1019
optimism is related to self-efficacy beliefs. The entrepreneurs’
optimism is an ‘‘inside view’’ of the potential success of the venture,
largely based on the entrepreneurs’ evaluations of their abilities
and knowledge. When forced to take an outside view,
entrepreneurs were much more realistic in judging probable
outcomes
3
. Cooper et al.
13
described that entrepreneurs
comparing to others are more optimistic and entrepreneurs who
promote rapidly is often so much optimistic for evaluating of
opportunities.
The second personality trait is ‘creativity’. Creative factors play
a great role in entrepreneurial decision making. Schumpeter
58
was
the first to introduce the notion that successful entrepreneurs
discover opportunities that others do not see. Hills and Lumpkin
26
found that 90% of those surveyed by them, find creativity very
important for opportunity identification. However, solo
entrepreneurs found it significantly more important than did the
networked entrepreneurs
3
. Also Chandler and Detienne
12
believe
the creativity has positive relation to starting up a new business.
Risk recognition: The risk recognition is defined as the
entrepreneur tendency to accept or avoid the risk. Entrepreneurs
tend to view business situations more positively than do non-
entrepreneurs. They perceive strengths and opportunities where
others see weaknesses and threats
15
. Risk recognition and
network relationships are important to the stimulation and
advancement of new ideas
16
.
Specific human capital: Defined human capital more specifically,
delineating it into general human capital (basic skills) and specific
human capital (industry-related or technically related skills), there
will be a positive relationship between an individual’s level of
specific human capital and the number of opportunities identified
14
.
Ardichvili et al.
3
suggested 4 parts for defining the relation
between opportunity identifying and human capital: 1) special
interest; 2) prior knowledge about the market; 3) prior knowledge
about the customer problems; 4) prior knowledge about the
different possible ways for servicing to the markets which
probably flourish and raise with identifying successful
entrepreneurial opportunities.
Management skills: Few studies have shown the link between
management skills and opportunity recognition skills of the
entrepreneurs. Park
36
argues that management skills in addition
to technical skills are needed to identify the right opportunities in
hi-tech startups
41
.
Competence: Entrepreneurial competence is defined as the set of
knowledge, skills, and abilities that enable an entrepreneur to
successfully perform their job role
34
. The traits affects the growth
of new venture businesses and play role in identifying the
opportunities and organizational skills
9
.
Ability to absorb and bear uncertainty: The uncertainty tolerance
plays a role in the motivation of entrepreneurial action, and the
ability to bear uncertainty is important at the noticing stage. One
deals with the entrepreneur’s perception of the level of uncertainty
(ability to absorb uncertainty), and the second stream deals with
the entrepreneur’s ability to function effectively in uncertain
environments (ability to bear uncertainty). Individuals must be
capable of absorbing the uncertainty associated with exploiting
an opportunity. If they lack this capability, they are unlikely to use
their cognitive capabilities to look for opportunities
10
. To escape
ignorance, prospective entrepreneurs must possess sufficient
information about the environment, enough relevant knowledge
to give that information meaning, and be motivated enough to
take notice of the information upon encountering it
47
.
Social Networks
Social network provides the financial supports, credits and the
business and information sources. Therefore, the entrepreneur
social network as a collection of opportunities helps entrepreneurs
to reach to intangible information and tangible sources
5
. Also
Baron and Ozgen
7
expressed that professional networks are one
of the most important factors that affect opportunities identifying
by entrepreneurs directly and positively. It has also provided
information from these networks to make entrepreneurs more aware
about potential opportunities and help them to identify the suitable
opportunities. The high consolidated networks are effective to
create knowledge and new ideas and also finding the opportunities
for starting up the new businesses
4
.
Partners: Includes the formal partners with or without identical
shares, besides the informal partners which benefit from the
business.
The weak nodes network: Reaching new and unique information
by these networks is so much easier because of the lack of regular
interaction of person with the networks. Hence, these persons
find more opportunities.
Internal restrict: The collection of persons with whom the
entrepreneur has sustainable and long-term relations but they are
not as partners in the business, that include close friends, family,
colleagues and neighbours.
Activity collection: The persons whom the entrepreneur apply to
provide essential sources for identifying the opportunities
30
.
Prior Knowledge and Experience
Prior knowledge, which refers to an individual’s distinctive
information about a particular subject matter, may be the result of
work experience, education or other means. Therefore, prior
knowledge provides people an increased ability to “see” more
quickly important connections between concepts, which enhances
his or her ability to identify more opportunities and increased creative
ability to generate more innovative opportunities
46
. Knowledge can
be an enabling as well as a constraining factor in opportunity
development
56
. Entrepreneurs with business ownership experience
identified more business opportunities, and more innovative
opportunities
53
.
Information process: To identify the opportunities for new venture
businesses, entrepreneurs should acquire the information about
special industries, technologies, markets, governmental policies
and other factors in some ways and interpret and implement them.
These types of information have the important roles in initiated
identifying of opportunities and studying of their feasibility before
the entrepreneurs conclude that they are qualified as opportunities
1020 Journal of Food, Agriculture & Environment, Vol.10 (2), April 2012
to start up new and sustainable venture businesses
7
. Opportunity
recognition by connecting the dots, using cognitive frameworks,
relates to objective information processing
7
. The human information
processing can moderate entrepreneurial opportunity
identification
54
.
The background and experience: The experience is a person
thought patterns development along the time that enables the
entrepreneur, comparing to others, to perceive, refine, analyze,
make decision and implement based on opportunities effectively
17
.
Entrepreneurs revealed that most successful ideas stemmed from
entrepreneurs prior experience of customers and markets
27
.
Knowledge structure: Knowledgeable individuals have created
categories of information based on a deep structure that involves
more stronger and richer links between concepts. These deeper
and richer connections can enhance an individual’s ability to
identify opportunities that are more innovative
46
. Entrepreneurs
construct profit opportunities in their minds from their knowledge
of the business world
55
. This entails making new connections
between different types of knowledge
22
.
Technology expertise: One of the effective factors in creating
innovations that acquires with experience and knowledge is
technology expertise, which has an important role in identifying
and developing an opportunity
36
. Deep technological knowledge
is prerequisite and necessary factor for new venture business
ideas
27
. Entrepreneurs are able to identify new ideas for new
businesses and making new products and services that others
would like to buy them by applying their expertise and experiences
25
.
Customer needs: The awareness about the customer needs help
create a new idea and finally start up a new business
36, 38, 44
.
New markets: Entrepreneurs create new opportunities by the
destruction of de facto structure of markets and make new demands
through innovation. This may lead to elimination of existing
markets. These new markets are a new agent in creating new ideas
3,
36
. Entrepreneurial opportunities are derived from the unbalance
factors in the markets
28
.
Cognitive frameworks: Opportunities emerge from a complex
pattern of changing conditions – they come into existence at a
point in time because of the juxtaposition of conditions which did
not previously exist
7
. Recognition of opportunities depends,
partially on individual cognitive structures - frameworks developed
from experience that provides the cognitive basis for “connecting
the dots” into patterns suggestive of new business opportunities.
One reason why specific persons (and not others) perceive such
patterns is that they possess the cognitive frameworks that permit
them to do so
37
.
Alertness: Alertness is a process and perspective that helps some
individuals to be more aware of changes, shifts, opportunities,
and overlooked possibilities
50
. Intelligence and improving the
people capabilities for organizing and interpreting of information
in the different areas of knowledge relationship is increasing of
new opportunities
23
. Then alertness is a concept that has the
potential to add substantially our understanding of how new ideas
get initiated and pursued. Alertness has been central in the context
of the recently developing area of “opportunity” in
entrepreneurship research
50
. Ardichvili et al.
3
argue that any
recognition of opportunity by a prospective entrepreneur is
preceded by a state of heightened alertness to information.
Research: The theoretical base of active research is compatible
to neoclassic economy view and the entrepreneurial benefits
belong to people or organizations with better research skills
12
.
Entrepreneurs are more likely to engage in active search for
opportunities. Opportunities often recognized by people not
engaged in active search
37
. As a result the scanning and search
dimension helps lay the foundation for developing cognitive
frameworks. Entrepreneurs with more extensive scanning and
search will have a wider range of knowledge and information,
which can benefit them in attaining expert performance in enhanced
alertness to business
50
.
From Idea to Business
An entrepreneur’s personal characteristics and environment
influence the proceeding from a new venture idea to an
entrepreneurial opportunity
48
. Singh et al.
48
believed that the
process of opportunities identifying is the evaluation of initial
business ideas by entrepreneurs and to realize some of them and
they decide to start up new venture of businesses based on them
17
.
The opportunities are identified by recognition and development
of creative ideas that finally result in starting up a new business
25
.
Entrepreneurs decide to start a new business or expand in a new
product-market when they think that there is an opportunity to
transform the resources away from present average configurations
to more promising opportunities
3
.
Changes and trends in the environment: Changes are the source
of opportunities and any change in the environment is resulted in
identifying of series of opportunities
21, 33, 43, 49
. The process of
identifying of opportunities is started with evaluating external
environment analyzed by searching process
25
. In beliefs of Mayo
et al.
30
the more intelligent people do not miss the important
changes causing new profitable ideas for business. It is also
believed, the opportunities are indentified better by perception of
environmental changes and trends
37
.
Type of Opportunities
Innovative opportunities: Innovation is to invent a new product,
to make a new market, a new production method , to explore a new
source for supplying of raw material and semi knock down
products and also to start up a new business
1
. The successful
entrepreneurs join creativity and innovation to needs and
opportunities of the market by an organized and regulated process
and convert them to the entrepreneurial opportunities with
continuous actions and emerge them with starting up the
businesses
35
. In the innovation to search for finding opportunities
of production, market and implementation is considered that these
opportunities do not exist now
19
. The factors like environment,
the entrepreneur characteristics and the new technology and
knowledge have the important role to identify the innovative
opportunities that this subject is the core force and initial part in
the entrepreneurship process
11
.
Journal of Food, Agriculture & Environment, Vol.10 (2), April 2012
1021
Radical innovation: Radical innovation is the fundamental
innovation with the high novelty either its effect on the series of
product properties (price performance) or main changes supply,
such as breaking to past path. These innovations are often
described with expressions like pioneer inventions
2
and
discontinuous markets
52
. Radical innovation involves the
application of significant new technologies or significant new
combinations of technologies to new market opportunities
39
and
renders all the old skills and obsolete knowledge. This is an
opportunitity for new players to enter the industry and take over
the old firms
52
.
The ‘incremental opportunities’ put the front side of radical
opportunities. When entrepreneurs take action in the market place,
they may discover business opportunities but they would identify
and pursue business opportunities that either represent
incremental improvements over existing goods, services, and
processes or represent imitations of existing opportunities
23
.
Imitative opportunities: Although this strategy conflicts to
innovation but it is much valuable to institutionalize the spirit of
entrepreneurship in the organization
1
. A number of people got
their ideas by looking at other peoples businesses. They saw
someone else at work and felt that they could do it better
51
or they
simulate and repeat the innovative works of entrepreneurs
1
.
Concept ‘creation’ involves redirecting or recombining resources
in order to create and deliver value superior to that currently
available. Concept creation may go well beyond adjustment of
current matches of resources and needs and may even lead to
dramatic restructuring of an existing business or ‘radical
innovation’
3
. The entrepreneurs do not identify the opportunities
but they create them by taking advantage from change and
innovation in the economy
12
. Entrepreneurs are the rare talented
people using the technological and sociological changes to make
a revolution in de facto balance and create new products, services
and methods
20
. A person with imagination and dream can create
opportunities from nothing. Hence, the opportunities are just in
the mind of people and emerge by implementing them practically
12
.
Discovery: Perception of a ‘‘fit’’ between market needs and
resources presupposes that the needs and resources were already
matched, as might be the case with an underperforming business.
Perception of an existing ‘‘match’’ of market needs and resources
represents discovery of the type that might follow exploration of
a particular geographic area or product market space
3
.
Entrepreneur identifies the opportunities by dealing and
moderating of prices in the market and also investing on the
knowledge or the asymmetry of information. Entrepreneurs find
the opportunities considering of the economic conditions, the
partial integration of people decisions and the prices adjustments
in the market circumstances
20
. The launching of opportunity is
from the identifying the opportunity
44
. According to the view of
society needs, the identifying of opportunities is emphasized on
the de facto and approximately unsatisfied needs
32
.
For proving that the model is practical in “B” section (Fig.1), an
investigation in the fishing industry was done by the arrangement
of an interview with experts. For identifying of opportunities, first
all the related businesses of fishing industry in the world were
investigated and all of them were put in the superficial dimension
of the model. The group of businesses in Iran has been put the
left side of model and the others not Iran has been put the right
side of model. The businesses in the right side of model are as the
opportunities of the new and innovative businesses in the fishing
industry of Iran that they increase the variety of businesses in
this industry. The businesses in the left side of model have the
sufficient potential to increase as the imitative and incremental
businesses and deepen the model or increase the number of
businesses in this industry.
The mentioned items in the right side of the model are the
opportunities up to date the fishing industry of Iran in the world
including lobsters and crabs and mollusks, aquatic plants, culture
frogs, crocodiles, cage culture, fish, marine fish breeding freshwater
fish like tilapia and carp and eel and salmon culture, echinoderms.
Establishment of complementary industries to improve the quality
and using the waste of aquatics for the pharmaceutical and
cosmetics applications and the establishment of information banks
to inform breeders and fishermen that there are not businesses
like above mentioned items but in the world there are all of them
with much variety in each item. Therefore, use of this model causes
to identify the types of entrepreneurial opportunities in the different
industries (Fig.2).
Conclusions
In todays world, the identifying of opportunities has been known
as one of the most important capabilities of entrepreneurs. These
innovative entrepreneurs are economic heroes whose creativity
invigorates the economy with new ideas that lead to economic
growth, but less imaginative people can also play an important
role. They can copy the business ideas of pioneers. In doing that,
they spread new business techniques and raise productivity
throughout an economy
57
.
In this article, a new and practical model has been designed for
identifying types of entrepreneurial opportunities. It is important
to consider opportunity as a two-dimension element that one side,
opportunities regarding to environment conditions can be
innovative and result in the variety of businesses. On the other
side, the identified opportunities can be considered as imitated
and incremental opportunities and result in increasing the
businesses that finally, the efficiency of economy will be increased
several times more than now.
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